Correlation Between Fortis and Boralex

Can any of the company-specific risk be diversified away by investing in both Fortis and Boralex at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fortis and Boralex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fortis Inc and Boralex, you can compare the effects of market volatilities on Fortis and Boralex and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fortis with a short position of Boralex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortis and Boralex.

Diversification Opportunities for Fortis and Boralex

-0.63

Correlation Coefficient

Fortis  Boralex

Excellent diversification

The 3 months correlation between Fortis and Boralex is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Inc and Boralex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boralex and Fortis is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fortis Inc are associated (or correlated) with Boralex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boralex has no effect on the direction of Fortis i.e., Fortis and Boralex go up and down completely randomly.

Pair Corralation between Fortis and Boralex

Assuming the 90 days trading horizon Fortis Inc is expected to generate 0.52 times more return on investment than Boralex. However, Fortis Inc is 1.9 times less risky than Boralex. It trades about 0.15 of its potential returns per unit of risk. Boralex is currently generating about -0.07 per unit of risk. If you would invest  5,220  in Fortis Inc on September 15, 2024 and sell it today you would earn a total of  806.00  from holding Fortis Inc or generate 15.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fortis Inc  vs.  Boralex

Fortis Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortis Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fortis is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Boralex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boralex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Fortis and Boralex

The main advantage of trading using opposite Fortis and Boralex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortis position performs unexpectedly, Boralex can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Boralex will offset losses from the drop in Boralex's long position.

The idea behind Fortis Inc and Boralex pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.